Ex-Medicare chief urges fix to rule for rehab coverage

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Former Medicare chief Donald Berwick said Obama administration officials should abandon a rule that is leaving many older Americans without coverage for expensive rehabilitation care after they leave the hospital.

The Medicare rule requires recipients to be admitted as a hospital inpatient for at least three days before the federal health insurance program for seniors and the disabled will pay for follow-up nursing home care. The problem is that an increasing number of patients are spending days in the hospital under observation status, often without realizing they were never officially admitted.

“The patient ends up holding the bag, and that’s not fair or appropriate,’’ Berwick, a physician and a Democratic candidate for governor of Massachusetts, said in an interview this week.

Berwick said that when he ran Medicare from July 2010 to December 2011, he discussed scrapping the three-day rule. But others in the agency worried that without this requirement, people would emerge from “the woodwork’’ to check into nursing homes without any review of whether they really need to be there. “There was concern in the administration that it would lead to abuse of the system,’’ he said.

But he believes it is possible to establish other safeguards, such as requiring a doctor to verify a patient’s condition. “Medicare should get rid of that rule,’’ he said.

Medicare originally intended observation care as a way to give doctors time to evaluate whether a patient should be admitted to the hospital or is stable enough to go home, usually within 24 to 48 hours. But hospitals are increasingly keeping patients in observation status longer: 8 percent of Medicare recipients had observation stays longer than 48 hours in 2011, up from 3 percent in 2006.

‘The patient ends up holding the bag and that’s not fair or appropriate.’ — Dr. Donald Berwick, who served as Medicare chief from July 2010 to December 2011 in the Obama administration

US Representative Joe Courtney, a Connecticut Democrat, has filed legislation that would make it easier for Medicare recipients to get follow-up care by eliminating the distinction between inpatient and observation status. Patients who spend at least three days in a hospital, no matter how they are classified, would qualify for coverage, as long as doctors believe rehabilitation care is needed.

When Courtney first filed the bill three years ago it had 11 sponsors. It now has 93, he said.

“We have met with [Medicare] numerous times,’’ he said in an interview this week. “It seems like there is a statutory fix that is required, and this was the cleanest way. We’ve gotten tremendous support.’’

Courtney said he was alerted to the problem several years ago when a family from Norwich called his office. A man in his 80s had spent five days in the hospital. When his daughter-in-law took him to a nursing home, a social worker told her that he was “coded as observation” and that “you are going to have to write a check for $10,000,’’ Courtney said.

He said new rules issued by Medicare this month, which say observation care should be no more than “two midnights,” may help, but will not solve the problem.

Based on meetings with hospital officials, he believes they are classifying more patients as observation because they are worried Medicare will penalize their institutions for inappropriate billing. Medicare contractors have demanded refunds from hospitals that admit patients the government believes should have been treated as observation patients or outpatients.

“After you have been burned once or twice, you are going to err on the side of caution,’’ Courtney said.

He said the Centers for Medicare & Medicaid Services is analyzing the cost of scrapping the three-day inpatient rule. He expects his bill to get wrapped into legislation promoting broader Medicare reforms.

Another couple, Harold and Sylvia Engler of Framingham, recently had to pay the entire $7,859 cost of his rehabilitation care and the medications he needed while at the nursing facility, the Globe reported. Harold Engler spent 10 days in Beth Israel Deaconess Medical Center trying to snap back from complications after urgent hernia surgery, but was never actually admitted.

Because the hospital classified him as an observation patient, Medicare would not cover his follow-up nursing home care. His wife called US Senator Edward Markey’s office and the couple is working with a lawyer.

“The Englers notified my office about a problem that unfortunately too many Americans, especially seniors, are faced with every day,’’ Markey said in an e-mail this week. He said he plans to sign onto Courtney’s legislation.

“Because of a Medicare law and the technicalities of how hospital visits are classified, the Englers were left with a sky-high bill for rehabilitation services that should have been fully covered under Medicare. Patients should not be forced to pay out of pocket for covered Medicare services due to an arbitrary federal policy,’’ Markey said.